Businesses in Indiana can earn a 3% state income tax credit for the increase in their annual research and development expenses, compared to the previous two years. To calculate the credit, the eligible expenses incurred for qualifying R&D activities must be identified and calculated, including wages, supplies, and contract research. The credit must be claimed 25% each year for four years. Accurate records and documentation must be kept to determine eligible expenses.

To determine the tax credit for augmented research activities in Indiana, businesses should complete Schedule IT-20REC. The credit amounts to 15% of the rise in qualified research expenses incurred or paid within the state during the taxable year, above the taxpayer’s base amount up to $1 million, with up to 10% credit for amounts over $1 million.

In Indiana, R&D tax credits are available to companies that engage in qualifying activities to advance knowledge or improve processes, products, or technologies. These must be technological, aid in product development, and involve experimentation. Eligible expenses exclude land, equipment, surveys, customer-specific costs, and government-funded research. Some of the qualifying R&D activities include: Development of new products, Testing and experimentation, Development of prototype, Solving technical problems and the like. Accurate record-keeping is crucial for claiming credits.

Eligible businesses include corporations and pass through entities. Trusts and estates can also claim the credit against their own liabilities. However, beneficiaries of estates or trusts are not eligible except for Grantor Trusts.